Vraj Iron and Steel Limited

Basic Materials — Steel · NSE

₹125.00+₹1.49 (+1.21%)

DalalBaazaar Score

43 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by high debt relative to equity, negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

The 60-second version of Vraj Iron and Steel Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Vraj Iron and Steel Limited engages in the manufacture and sale of sponge iron, MS billets, TMT bars, power and others related items under the Vraj brand primarily in India.

IndustrySteel

SectorBasic Materials

Employees492

Annual revenue₹588 Cr

How does it make money?

Turns over ₹588 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation. Each of its 492 employees supports ₹1.19 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.19 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, JINDAL STEEL LIMITED, STEEL AUTHORITY OF INDIA. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 9.5% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE10.8%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +14% while net margin moved -48% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+14%

Margin effect-48%

DalalBaazaar Score

43/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 4.5% — barely ahead of inflation
✗ Profit has declined at 16.0% a year
✗ Profit is compounding slower than revenue — margins are being squeezed as the business grows

Quality vs. Valuation

Company Quality

36/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

80/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

11.5x

2Y Median

10.3x

29 monthly readings · mean 10.6x · range 6.6x–15.4x

Sector Median

18.2x

median of 4 sector peers

⚠️Current valuation is approximately 11% above its 2y median of 10.3x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟢Against its sector it trades 37% below the peer median of 18.2x.

vs. its own history

Fair

10.3x median over 29 months · +11%

vs. sector peers

Cheap

18.2x median of 4 peers · -37%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

6.7x

PEG

—

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 38.3% to 7.4% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 48.8% to 9.5% — often a sign of competition or overexpansion.

Red Flags

7 items require attention · 5 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 74% over 3 years, from ₹25 Cr to ₹43 Cr.
🔴High leverageFinancial
Debt/Equity of 9.92x — earnings must service borrowings before shareholders see anything.
🔴Free cash flow negative for 3 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Receivables growing faster than salesFinancial
Receivables up 152% against revenue up 14% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 113% against revenue up 14% — stock may not be moving.
🟡Profit is decliningFinancial
Net profit is down 41% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 4.2 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 37% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 15.8% to 11.5%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 9.92x. Interest is payable whether or not the business has a good year.
Sales are being booked faster than collected
Receivables are up 152% against revenue up 14%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Growth barely outpaces inflation
Revenue compounding at 4.5% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Returns on shareholder capital are falling
ROE has dropped from 38.3% to 7.4%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 10%✓ 11.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹74 Cr
Profit that never becomes cash eventually stops being profit.
3Revenue growth stays above 4% a year✓ 4.5% CAGR
Latest reported year was 40.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Debt / EBITDA stays below 2x✓ 0.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✓ 9.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

6 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 3 neutral · 3 weak

Market Cap

₹412 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

11.5x

Cheap

Cheap against the generic band

P/B Ratio

0.96x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹10.89

Profitable

Profitable on a per-share basis

ROE

7.4%

Weak

Weak capital efficiency

ROCE

9.5%

Moderate

Moderate return on the capital in the business

Debt/Equity

9.92x

High

High leverage

Revenue Growth (YoY)

40.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

51.7%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹74 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

6.4%

Average

Average margins

Net Margin

5.6%

Average

Average bottom-line conversion

Current Ratio

7.15

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

1.58

High swing

Swings more than the market in both directions

52W Range Position

54%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

123.7 / 123.5

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

45.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹516 Cr	₹420 Cr	₹475 Cr	₹588 Cr	+4.5%
EBITDA	₹81 Cr	₹84 Cr	₹68 Cr	₹68 Cr	-5.8%
EBITDA Margin	15.8%	19.9%	14.4%	11.5%	—
PAT (Net Profit)	₹54 Cr	₹57 Cr	₹44 Cr	₹32 Cr	-16.0%
EPS	₹16.37	₹17.41	₹14.28	₹9.7	-16.0%
ROE	38.3%	28.7%	11.1%	7.4%	—
ROCE	48.8%	30.5%	14.9%	9.5%	—
Total Debt	₹25 Cr	₹63 Cr	₹2 Cr	₹43 Cr	+20.2%
Free Cash Flow	₹61 Cr	-₹45 Cr	-₹81 Cr	-₹74 Cr	—

🟢 Revenue has grown at 4.5% a year over 3 years.

🔴 EBITDA has shrunk at 5.8% a year over 3 years.

🔴 EBITDA Margin has fallen from 15.8% to 11.5% over 3 years (-4.2 pts).

🔴 PAT (Net Profit) has shrunk at 16.0% a year over 3 years.

🔴 EPS has shrunk at 16.0% a year over 3 years.

🔴 ROE has fallen from 38.3% to 7.4% over 3 years (-30.9 pts).

🔴 ROCE has fallen from 48.8% to 9.5% over 3 years (-39.3 pts).

🔴 Total Debt has grown at 20.2% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹61 Cr to -₹74 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹496 Cr

Total Liabilities

₹66 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹31 Cr

Capex

-₹105 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

78.6%

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
JINDAL STEEL LIMITED	39.1x	5.3%
STEEL AUTHORITY OF INDIA	16.5x	7.1%

Recent News

3 mixed3 general

Vraj Iron and Steel (NSEI:VRAJ) - Stock Analysis

Simply Wall Street, 11 Oct

Vraj Iron & Steel to set up ₹450 crore greenfield plant

scanx.trade, 10 OctCapacity

🟡Mixed / dependsCapacity additions can raise revenue over two to three years, but the capital spend usually pressures free cash flow first. Worth checking whether the capex is funded from operations or from borrowing.

Vraj Iron and Steel (NSE:VRAJ) Gets Fresh ToR for Greenfield Plant

Kalkine India, 15 OctCapacity

Vraj Iron and Steel (VRAJ) Share/Stock Price Live, NSE

TechGraph, 07 Oct

Vraj Iron and Steel Share Price Target 2026: Rs 145 Analyst Forecast

Univest, 26 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Vraj Iron & Steel Ltd is Rated Sell

MarketsMojo, 14 Oct

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongValuation

MiddlingFinancial Health

WeakBusiness Quality · Growth · Profitability · Risk

Points for each in the Score ↑

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 5 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑